Canadian Dollar: USD/CAD (CAD=X) Dips on Soft Job Numbers
Last week was busy for the Canadian dollar. The currency dropped below 1.32 and touched a 1-month high on Thursday, but reversed directions on Friday and lost ground. USD/CAD took advantage as Canadian employment numbers sagged, while U.S. nonfarm payrolls were much stronger than expected.
In Canada, November employment numbers were dismal. Employment fell by a remarkable 71.2 thousand, its worst decline since January 2018. Analysts had expected a gain of 10.0 thousand. The unemployment rate jumped to 5.5%, up sharply from 5.5% a month earlier.
In the U.S., the week ended with an excellent nonfarm payrolls report. The U.S. economy added an impressive 266 thousand jobs in November, crushing the estimate of 181 thousand. As well, the 3-month average payroll number increased from 189K to 205K. Recent nonfarm payrolls releases have been soft, due to the recent strike at General Motors. The November figure was much higher, as the striking workers went back to work in October and were accounted for in the November report. Wage growth remained steady at 2.0%, but fell shy of the forecast of 0.3%. There was more positive news on the consumer front, as UoM Consumer Sentiment surged to 99.2 in December, up from 95.7 in November.
OPEC Agrees to Lower Production
Last week’s OPEC meeting ended with an announcement that an agreement had been reached to lower production, effective January 1. A reduction in output is aimed at curbing the worldwide glut of crude and stabilizing oil prices. At the same time, some OPEC members are notorious for failing to adhere to their production quotas, and if the new agreement is not honored, oil prices could head lower. Canada is a major oil producer, so the Canadian dollar is sensitive to movement in oil prices.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.33.
The projected lower bound is: 1.31.
The projected closing price is: 1.32.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 53.4116. This is not an overbought or oversold reading. The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 48.58. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 113 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -65. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX CAD= closed up 0.000 at 1.323. Volume was 96% below average (consolidating) and Bollinger Bands were 33% narrower than normal.
Open High Low Close Volume___
1.323 1.324 1.322 1.323 2,921
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.32 1.33
Volatility: 6 5 6
Volume: 40,268 61,090 76,996
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX CAD= is currently 0.4% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of CAD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on CAD= and have had this outlook for the last 21 periods.
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